WEST BENGAL NATIONAL UNIVERSITY OF JURIDICAL

SCIENCES

SUBJECT: CORPORATE INSOLVENCY

RESEARCH PROJECT ON
“UNCITRAL MODEL LAW ON CROSS BORDER INSOLVENCY AND
DETERMINATION OF COMI”

Submitted to:
Asst. Prof. Ms. VANEETA Patnaik
Professor of Law

Submitted by:
ALTAMASH (PG-21835)

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UNCITRAL Model Law on Cross Border Insolvency (1997)
Date of adoption: 30th May 1997
Purpose: The Model Law is meant to help States- to equip their financial condition laws with
a modern legal framework to a lot of effectively address cross-border financial condition
proceedings regarding debtors experiencing severe monetary distress or financial condition.
It focuses on authorizing and inspiring cooperation and coordination between jurisdictions,
rather than attempting the unification of substantive insolvency law, and respects the
differences among national procedural1 laws.
An cross-border insolvency is one where the insolvent debtor has assets in more than one
State or where some of the creditors of the debtor are not from the State where the insolvency
proceeding is taking place Key provisions (a) Access: representatives of foreign insolvency
proceedings and creditors a right of access to the courts to seek assistance authorize
representatives of local proceedings to seek assistance elsewhere.
(b) Recognition simplified procedures for recognition of qualifying foreign proceedings and
appointing the foreign representative.
a qualifying foreign continuing is either a main continuing, taking place where the debtor had
its centre of main interests- COMI2 a non-main proceeding, taking place where the debtor
has an establishment.
effects - the relief accorded to help the foreign continuing.
(c) Relief interim relief at the discretion of the court an automatic stay upon recognition of
main proceedings (d) Cooperation and coordination cooperation among the courts of States
where the soul's assets area unit placed and coordination of synchronic proceedings regarding
that debtor.

EU Case Study:
Euro food IFSC Ltd 2006 ECJ (C-341/04) Regulation (EC) No 1346/20003- Judicial
cooperation in civil matters Decision to open the Insolvency proceedings Centre of the
debtor’s main interests (COMI) On February 20, 2004, the Parma court at Italy opened a
main insolvency proceeding for Euro food. It found that Euro food's centre of main interests
COMI’ was located in Italy, because its management and centre of control came from its
Parmalat parent that was located there. 41910-228346000 The Irish liquidator appealed, but
the Italian appellate court affirmed. On March 23, 2004, the Dublin High Court found that
Euro food's COMI was located in Ireland, because its registered office was located there and
it appeared to the third party creditors’ that its COMI was located in Ireland.

1
https://www.uncitral.org/uncitral/eu/uncitral-texts/insolvency/1997Mdel.html visited 10-03-2019
2
ibid
3
https://www.iiiglobal.org/sites/default/files/cordination_of__insolvency_cases.pdf visited 10-03-2019
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The court additional control that associate degree Irish main continuing had opened on
twenty seven Gregorian calendar month 2004, when it had appointed the temporary
liquidator.
The Italian administrator appealed this decision to the Irish Supreme Court, which referred
the matter to the ECJ.

Centre of Main Interests (COMI):

Place of Registered workplace wherever a soul may be a company whose registered
workplace which of its parent company area unit placed in 2
different Member States, the presumption will be rebutted given that factors that area unit
each objective associate degreed discoverable by third parties alter it to be established that an
actual scenario exists
which is totally different from that that location at that registered workplace is deemed to
replicate.
That could be so in particular in the case of a company not carrying out any business in the
territory of the Member State in which its registered office is situated. ‘Main insolvency
proceedings’4: The rule of priority The main insolvency proceedings opened by a court of a
Member State must be recognised by the courts of the other Member
States, while not the latter having the ability to review the jurisdiction of the court of the gap
State.
The rule of priority provides that financial condition proceedings opened in one Member
State area unit to be recognised all told the Member States from the time that they
manufacture their effects within the State of the gap of proceedings.

Questions for the ECJ a people Supreme Court referred queries on the interpretation of
the Regulation to the ECJ: What implanted the gap of financial condition proceedings among
the that means of the Regulation and that national court had jurisdiction to open main
financial condition proceedings?
What area unit the governing factors for determinative centre of main interests once the
registered workplace of a parent company and its subsidiary area unit placed in several
member states?
Whether a member state had to relinquish recognition to a call of another member state
purporting to open financial condition proceedings in respect of a soul, when that debtor had
not been given the right to fair procedures and a fair hearing Facts and Analysis The
European Court of Justice (ECJ)5 gave opinion on referral by Supreme Court of Ireland
of five queries of EU financial condition Regulation whether or not to open a main financial
condition continuing for Euro food IFSC Ltd in competition with a parallel main financial
condition case for a similar entity in Parma, Italy.

4
https://www.ebf-fbe.eu/publication/visited 10-03-2019
5
ibid

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In re Euro food IFSC Ltd., [2004) IESC 45 (lr.).
The two parallel main proceedings arose because each court decided that Euro food's centre
of main interests (COMI) was located in its own country Case 341/04, Euro food IFSC Ltd,
2006 E.C.R._. (Euro food-ECJ)6.
According to the language employed in country version of the EU Regulation, a "proceeding"
corresponds to a "case" under U.S.
bankruptcy law. See, e.g., 11 U.S.C. §§ 301-03 (providing for the filing of a "case" under
the bankruptcy statute). 2 sets of factors necessary to determine the proper location of the
COMI of a subsidiary. Hence, first set of factors is the location where a debtor regularly
administered
its own interests, as ascertainable by third parties, and the country in which it is incorporated.
The second set of things arises from the placement of the parent company that, by virtue of its
ownership and power to appoint directors, is able to control the
policy decisions of the subsidiary.
Where (as within the Euro food proceedings), these factors point to different countries for the
location of the COMI, the court must determine the relative weight to give to each factor.
The criteria needed to be each objective and discoverable by third parties, typically the
debtor's major creditors.
As within the Euro food continuing, third parties might have undertaken sizeable to be sure of
the right target of debtors COMI .

Presumption that COMI is found in Country of Registered workplace

Rebuttal of Presumption
Under U.S. law, there is spread of how of treating a presumption and its attainable
rebuttal
ECJ call on Rebuttal necessities
"letter-box" company that's not carrying on any business within the country wherever
its registered workplace is found.
The presumption that monetary unit food's COMI was settled in Ireland, as a result of
its registered workplace was settled there, was supported by the proof of the expectations of
its major creditors.
Given this proof, the situation of its parent corporation Parmalat Spa in European
country was short to rebut the presumption.

6
https://www.ibbi.gov.in/wg-01%20Report.pdf visited 10-03-2019

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USA Chapter fifteen Bankruptcy Code

Determination of a remote debtor’s “centre of main interests” (“COMI”).

Morning Mist Holdings Ltd. v. Krys (In re Fairfield picket Ltd.), No. 11-4376, 2013
BL 102426 (2d Cir. Apr. 16, 2013)7

U.S. Court of Appeals for the Second Circuit dominated that COMI should be
determined on the premise of the debtor’s “activities at or round the time the Chapter fifteen
petition is filed,” instead of on the commencement date of the foreign continuing.

Court could take into account the amount between the commencement of the foreign
financial condition continuing and therefore the filing of the Chapter fifteen petition to
confirm that a mortal has not manipulated its COMI in unhealthy religion.”

Factors that will be thought-about in determinative COMI, could embrace the debtor’s
liquidation activities.

7
https://law.justia.com/cases/federal/appellate.../11-4376/11-4376-2013-04-16-html.visited 10-03-2019

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“COMI” underneath United States Bankruptcy Code :
Section 1517(b)8 of the Bankruptcy Code provides that
a “foreign continuing shall be recognized . . . as a remote main continuing if it's
unfinished within the country wherever the mortal has the centre of its main interests.”
The Bankruptcy Code doesn't outline “COMI.”
Section 1516(c) provides that, “[in] the absence of proof to the contrary, the debtor’s
registered workplace, or habitual residence within the case of a private, is probable to be” the
debtor’s COMI.
According to the statute’s legislative history, this presumption was enclosed “for
speed and convenience of proof wherever there's no serious contestation.”
An “establishment” is outlined in section 1502(2) as “any place of operations
wherever the mortal carries out a non-transitory economic activity.”

Kemsley v Barclays Bank, Fry & Provan[2013] EWHC 1274 (Ch).

Mr Kemsley was Associate in Nursing English bourgeois to whom Barclays created

Associate in Nursing unsecured loan for £5million.

In June 2009, he and his family emotional to the United States.

A bankruptcy petition was issued against him by HMRC within the kingdom in
Gregorian calendar month 2011. He then issued a debtor's petition for his own bankruptcy in
Jan 2012. He claimed he was within the kingdom on the date the petition was given, was
domiciled within the kingdom and had an area of residence within the kingdom inside the
previous three years, as needed by s265 financial condition Act 1986.

On one March 2012, Barclays issued proceedings in New york

Kemsley was created bankrupt within the kingdom on twenty six March 2012 on his
own petition.

Bankruptcy Trustees were appointed in kingdom, applied for recognition of the united
kingdom bankruptcy in United States u/ Chapter fifteen (in August 2012).

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https://www.mondaq.com/bankruptcy visited 10-03-2019

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In re Paul Zeital Kemsley, 489 B.R. 346 (Bankr. S.D.NY 2013).
The United States bankruptcy court dominated that Kemsley's9 COMI was within the
United States as of such date as a result of "the Debtor's shut relationship along with his
youngsters is a helpful proxy for the Debtor's10 subjective intent relating to his habitual place
of residence."
At the time of the filing of the united kingdom continuing, he was living within the
United States along with his family, thus his COMI was then within the United States.

9
https://www.mondaq.com/COMI visited 10-03-2019
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ibid

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INDIA
Recommendations by the Justice Eradi Committee and N.L. Hindu deity
informative cluster on Bankruptcy Laws.

The Eradi Committee11 Report:

Recommended that the Model Law be enforced in India; change of half VII of firms Act,
1956
in-bound and our-bound requests for recognition of foreign proceedings, co-
ordination of proceedings in 2 or a lot of States and participation of foreign creditors in
financial condition proceedings

The N. L. Hindu deity Committee12:

Indian laws on cross border financial condition are obsolete and aren't equivalent to
international legal standards

in the event of a world financial condition continuing involving Associate in Nursing

Indian company, Indian courts are unlikely to supply any aid or help to a remote liquidator

Proposed a Comprehensive Bankruptcy Code

Indian Companies Act 1956/ 2013

Winding up proceedings underneath the businesses Act,1956 :-

companies registered in Republic of India underneath the businesses Act, 1956

Indian courts have jurisdiction to listen to and adjudicate upon proceedings no matter
the actual fact that the most business of the corporate is also administrated elsewhere.

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https://www.mondaq.com/eradi-commmittee visited 10-03-2019
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ibid

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 In such proceedings, Indian similarly as foreign creditors will prove their debts.

companies that aren't registered in Republic of India

winding up proceedings is also initiated u/s 584 of the businesses Act, 1956, if it had
an area of business in Republic of India and within the following circumstances:

if the corporate is dissolved or has ceased to hold on business, or is carrying on

business just for the aim of concluding its affairs

if the corporate is unable to pay its debts

if the court is of the opinion that it's simply and equitable that the corporate ought to
be tense

Sec thirteen and 44A of the CPC offer for the treatment of foreign judgments in
mutual countries as conclusive, expulsion sure exceptions, like fraud, judgment not supported
deserves, not competent jurisdiction, etc.

Cases and Jurisdictions

Rajah of Vizianagaram v. Official Receiver AIR 1962 S.C. 500
Foreign creditors of a corporation that is incorporated in England Associate in
Nursing carried on business in Republic of India will prove their claims within the
concluding proceedings of the corporate as an unregistered company in India.
The Courts of a rustic addressing the concluding of a corporation will normally touch
upon the assets inside their jurisdiction and not with the assets of the corporate outside their
jurisdiction.
S. 271(3)13 says that the corporate incorporated outside Republic of India is also
termed or defined as Associate in Nursing un-registered company once it ceases to hold on
business in India.

13
https://www.wipo.int/wipolex/en/text.jsp?file_id=494910 visited 10-03-2019

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Cross-Border financial condition in Republic of India

The road ahead….

IBC 2016
Agreements with foreign countries (Section 234)
Letter of request to a rustic outside Republic of India in sure cases. (Section 235)
UNCITRAL Model Law on Cross-Border financial condition

The Insolvency & Bankruptcy Code 2016

Agreements with foreign countries.
234. (1) The Central Government could enter into Associate in Nursing
agreement with the govt. of any country outside Republic of India for imposing the
provisions of this Code.
(2) The Central Government could, by notification within the Official Gazette, direct that the
appliance of provisions of this Code in regard to assets or property of company mortal or
mortal, together with a private warrantor of a company mortal, because the case is also, set at
anyplace during a country outside Republic of India with that reciprocal arrangements are
created, shall be subject to such conditions as is also specific.
Letter of request to a rustic outside
India in sure cases.
235. (1) nonetheless something contained during this Code or any law for the nowadays in
effect if, within the course of financial condition resolution method, or liquidation or
bankruptcy proceedings, because the case is also, underneath this Code, the resolution skilled,
liquidator or bankruptcy trustee, because the case is also, is of the opinion that assets of the
company mortal or mortal, together with a private warrantor of a company mortal, ar set
during a country outside Republic of India with that reciprocal arrangements are created
underneath section 23414, he could create Associate in Nursing application to the
Adjudicating Authority that proof or action with reference to such assets is needed in
reference to such method or continuing.
(2) The Adjudicating Authority on receipt of Associate in Nursing application underneath
sub-section (1) and, on being happy that proof or action with reference to assets underneath
sub-section (1) is needed thirty five in reference to financial condition resolution method or
liquidation or bank

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https://www.mondaq.com/bankruptcy visited 10-03-2019

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